Main social and environmental risks and opportunities

Our objective is to identify the risks and opportunities in relation to topics that constitute the core of social responsibility and on which it is important to take a stance and work to build pathways to continuous improvement.

We pay constant attention to changes in the economic, social and environmental context to identify any emerging trends, potential risks and opportunities which may affect the development of our business. This occurs both externally, in relation to the changes that are observed in society, in the environment and at a global level; and within the Group, in relation to people, processes and environmental impacts. We also monitor and attempt to anticipate regulatory developments, court decisions and trends in public opinion reported in the media or even manifested in meetings with stakeholders.

With regard to external risks, one such risk potentially in a position to have the greatest influence on the Group activity is demographic change, characterised in particular by an aging population, lower birth rates, new family structures and migration. The picture that is emerging presents significant risks from an economic perspective, in terms of pressures on growth and the labour market, increase in public spending on pensions, healthcare and assistance, and the propensity to save.
These developments will also require major changes from a social perspective, in terms of increased demand for social services and the integration in various areas (work, school and society in general) of people from very different cultures, brought together by substantial migratory movements. Even the persistent economic crisis, rising unemployment and social phenomena such as the disintegration of many families, resulting in the growth of areas of poverty, threaten social cohesion and are a source of new needs.
It is clear that all of these factors entail a number of potential risks for a socially responsible insurance group, however they also provide opportunities to be seized in order to improve the lives of people, both through business development, especially with regard to pension and assistance products, and social action in the communities in which we operate.

In environmental terms, the most significant risks are those related to climate change. Among the most important consequences which can already be seen is the greater frequency of catastrophic events caused by natural phenomena such as storms and flooding. These phenomena are bound to increase, in terms of intensity, frequency and the number of areas affected, which include more and more densely populated areas and productive settlements, with the ensuing health consequences (e.g. spread of diseases transmitted by insects) and mortality. All of this leads, on the one hand, to an increase in the amount of compensation paid out by insurers and, on the other, to an increasing demand for insurance coverage, with opportunities to promote the sale of existing products and develop new ones. The concentration of risks, especially in more exposed areas, could however lead to price increases over time that are not sustainable for potential customers and to even the non-insurability of risks, should the aggregate exposures exceed the technical capacity of the Group.
From a technical perspective, the risk related to climate change is implicitly considered by Generali by the use of specific catastrophic models which, by assessing exposure for each individual risk, estimate the possible extent of damage according to the type of event (e.g. storm and flooding) and the country involved. Since these models are constantly being updated, over time they reflect the change in the risk conditions to which the portfolio is exposed, and therefore the impact that the ongoing changes will have on the portfolio. In this way, it is possible to verify the adequacy and increase the effectiveness of the underwriting strategy and to mitigate the Group risks.
Demographic change and climate change can have consequences even within the Group, particularly with regard to people management (aging workforce) and environmental policies, respectively.

More generally, each business area must be analysed, identifying potential sources of risk, particularly with reference to aspects which, more than others, expose the Group to reputational risk as a result of the deterioration of reputation or a negative perception of the corporate image among customers, counterparties, shareholders or supervisory authorities. In this respect, for a group like ours, which attaches strategic importance to ethical issues, reputational damage associated with any conduct that that is detrimental to the environment or violates fundamental human rights is of utmost importance.
Once the potential risk areas associated with various significant aspects (e.g. risk of non-compliance with human rights in the supply chain) have been identified, the most appropriate measures to avoid or minimise their occurrence should be considered. This action, at least for the main risks, is already covered by the development of policies, which in many cases contain measures to limit the risks identified (e.g. in relation to potential conflicts of interest).
Conversely, the adoption of virtuous behaviour in terms of people management and/or environmental impacts, may provide opportunities to improve the business climate and/or wellbeing in the workplace.

The following are examples of how we operate in practice in two areas that are particularly relevant in terms of social responsibility: respect for human rights and the fight against corruption.

Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328